Embattled Chinese property giant Evergrande's trading halt has caused a plunge in Australian mining stocks amid fears of a financial catastrophe.
With debts of more than $400billion and two missed interest payment deadlines, Evergrande on Monday announced it would suspend trading as it explored selling off its assets cheaply.
'Due to the suspension of trading in the underlying shares, trading in Futures & Options for China Evergrande Group (EVG) have been suspended until further notice,' the Hong Kong Stock Exchange said.
The first trading halt since Evergrande was established in 1996 has sparked fears that China, Australia's biggest trading partner, will make even more dramatic cutbacks to steel production - therefore hitting demand for iron ore from Western Australia's Pilbara region.
Embattled Chinese property giant Evergrande's trading halt has caused a plunge in Australian mining stocks (pictured is a worker next to an Evergrande advertisement in Hong Kong)
Evergrande is reportedly in the process of selling 51 per cent of its property development arm, Evergrande Property Services Group, to Hopson Development, as it gets extensions to pay $110million worth of annual interest payments to bondholders.
The problem with empty apartment towers, as Evergrande grapples with debt, is occurring as Chinese President Xi Jinping orders dramatic reductions in steel manufacturing to meet 2060 net zero carbon emissions targets.
Since the end of July, the spot price of iron ore - Australia's most valuable export - has halved from $US200 a tonne to less than $US100 on September 22.
Iron ore miner Fortescue Metals Group's share price on Tuesday dived by 1.5 per cent to $14.19 - almost halving from the $26.30 level at the end of July.
Diversified miner BHP fell 0.9 per cent on Tuesday to $36.61 - marking a 47.7 per cent plunge from $54.06 since August 4.
Rio Tinto fell 0.6 per cent to $96.95, and has since August 5 shed 27.9 per cent, falling from $134.40.
IG market analyst Kyle Rodda said Evergrande's debt problems had made investors question if China would continue needing so much Australian iron ore.
'Basically, what everyone's worried about now, clearly there are major vulnerabilities among several Chinese property developers now, Evergrande being the biggest of them,' he told Daily Mail Australia.
'The knock-on effect of that is obviously is reduced demand for raw materials, iron ore being significant to steel production.
With debts of more than $400billion and two missed interest payment deadlines, Evergrande on Monday announced it would suspend trading as it explored selling off its assets cheaply (pictured is the
